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2016 (1) TMI 170
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.... no books of account were made available to the survey party of the department. 3. The first issue in this appeal of revenue is against the order of CIT(A) deleting the addition of Rs. 12,88,301/- made by AO on account of unexplained expenditure found recorded in MS-3 impounded document. For this revenue has raised the following ground no.1:- "Ground No.1: That Ld CIT(A) has erred in law as well as facts in deleting the addition of Rs. 12, 88, 301/- was made as unexplained expenditure on the basis of vouchers at MS- 3." 4. Briefly stated the facts of the case are that revenue during the course of survey found certain documents, loose papers, register etc., which were inventorised as annexure MS-l to MS-20 and were impounded. But no books of account were found during survey from the business premises of the assessee and the same were produced during the course of assessment proceedings which were considered and examined by the A.O. while completing the assessment. The AO did not consider the books of account and proceeded to assess the income of the assessee on the basis of impounded document MS-3, which is a bunch of loose papers containing pages 1-322 out of which a....
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....s and cash book page for this year. It was further submitted that the AO has made mistake while making the table in the assessment order. In respect of one of the vouchers at serial no. 223, the amount in voucher was Rs. 8,500/- and not Rs. 85,000/-. In respect of the remaining vouchers for Rs. 1,40,402/- it was submitted that no entry could be found in the cash book for the assessment year in question as well as in earlier years but the assessee has admitted sales outside the books to the extent of Rs. 16,89,000/-. It was submitted that the AO has estimated profit of Rs. 2,48,048/- on such sales which is not disputed. The AO, therefore, in the process has allowed unrecorded expenses of Rs. 14,41,952/-(16,89,000 - 2,48,048). The said mount of Rs. 1,40,402/-, therefore, cannot be added since the amount was outgoing from above unrecorded sales. (1071399/- +140402/- + 76500/= 12883011-). The paper book submitted by the assessee was sent to the AO for his comments. The AO in the remand report reiterated the points mentioned in the assessment order. I have considered the assessment order, submissions made by the assessee, the remand report, rejoinder to the remand repo....
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....cash book was also produced. A statement prepared from the said ledger account is also filed. We found from the argument of assessee that the AO made a mistake while making tabulation in respect of one of the vouchers out of 136 vouchers. At SI page 223 the amount should be Rs. 8,500/- instead of Rs. 85,000/-. The total will thus come down to Rs. 12,11,301/- in place of Rs. 12,88,301/-. We find that the assessee before AO as well as before CIT(A) also claimed that all these vouchers have been entered in the regular cash book except some payments aggregating Rs. 1,40,402/-. All the payments were duly entered into in the regular books of accounts except the said sum of Rs. 1,40,402/- as is evident from the details prepared and filed before the lower authorities and also before tribunal. The accounts of the assessee are audited accounts and the entries in respect of the 136 vouchers mentioned by the AO (except Rs. 1,40,402/-) appear in the regular cash book in the same name and in respect of the same amount. Therefore the sum of Rs. 1071399/- is duly recorded in the books of accounts. We find that the AO has made the addition under misconception in respect to this amount Rs. 10,71,399....
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.... there was no evidence to suggest that these expenses related to this year, the addition was not justified Hence, we confirm the order of CIT(A) deleting this addition. 7. With regard to the disallowance of certain expenses from the impounded papers amounting to Rs. 10,71,399/- (Rs. 5,25,431+ 5,148+ 1,30,651+ 2,55,705), that the same have been correlated by the assessee in the written submissions with the unrecorded sales of Rs. 16,89,700/- on which the Ld AO himself has estimated the profit of Rs. 2,40,048/- thereby allowing the expenses of Rs. 14,40,652/-. Such expenses in fact have been found in the course of survey being the above sum of Rs. 10,57,536/- as well as the sum of Rs. 1,40,402/- and given in para-10. The AO in the remand report has reiterated his views taken in the Asstt. Order and has not disputed the claim of the assessee correlating these expenses with reference to the unrecorded sales. Therefore, we are of the view that CIT(A) has rightly correlated this addition with the profit of Rs. 2,40,048/- and we confirm the order of CIT(A) on this issue. 8. The next issue in this appeal of revenue is against the order of CIT(A) deleting the addition of Rs. 9,16,935/- m....
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....ase. The assessee is in the business of selling of jewellery. The modus operand of the assessee's business is that apart from its own sale of jewellery, the small gold smiths who also manufactures some jewellery on their own from the small portion of gold retained by them in course of labour work, also gives their jewellery for sale to the assessee. The assessee keeps the said jewellery in the show room and sales the same to the customers and on sale the payment is made thereafter to the gold smiths. This will be apparent from the seized paper MS-5 wherein the payment for small items of jewellery is made to such gold smiths. The assessee has already admitted the sale of jewellery amounting to Rs. 16,89,700/- outside the books and on the said undisclosed sale the AO has already estimated net profit at 14.68%. We find from records that in course of survey the AO found that some of the purchased jewellery as well as the labour charges were not accounted for, as mentioned above, which is not accounted for. AO himself has presumed outgoings for such sale (Rs.16,89,700- Rs. 2,40,048) at 14,41,652/-. The AO has found in the impounded papers the payment amounting to Rs. 10,57,336/-, which ....
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.... This ground is, hence, allowed." Aggrieved against the order of CIT(A), revenue came in second appeal before Tribunal. 14. We have heard rival contentions and gone through facts and circumstances of the case. Regarding expenditure of Rs. 7,45,959/- the AO during remand proceedings observed that on verification of impounded books of accounts as per ID Marks MS-10, it is seen from handwritten loose sheets from Page 10 to Page 23 that these pages are handwritten loose sheets. In these loose sheets there were some descriptions written in left side and in weight/grams written on the right side of the pages. But, nowhere it was written labour charge paid/receipt except Serial No.24 & 19. The total weight comes to 40283.730 grams and its value comes to Rs. 7,45,959 (100+605). In Page No.24, there was written that amount paid to Ajoy Sing 605.00 as it is seen from the Ledger page of Ajay Sing. The contention of the assessee that A.O. mixed up the weight in terms of gram and amount in terms of money is not at all correct as those pages i.e. Page 10 to Page 24 are all written in terms of weight nowhere it is written as labour charges except Rs. 605 as per Sl.No.24 and Rs. 100/- as per....
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....ssue in this appeal of revenue is against the order of CIT(A) deleting the addition made by AO on account of unexplained investment made in excess stock at Rs. 7,97,234/-. For this, revenue has raised following ground no.4: "Ground No. 4. That Ld. CIT(A) has erred in law as well as facts in deleting addition of Rs. 7,97,234/- which was made as excess stock considered as unexplained investment." 16. Brief facts leading to the above issue are that the AO during the course of assessment proceedings noticed from the impounded documents MS-4 that there is excess stock in respect to 22 carats Gold, 18 carats gold and silver ornaments and the differential value is at Rs. 7,97,234/-. The AO brought out the difference in a chart which is reproduced from assessment order as under: Items Disclosed by Firm (in gram) Found by survey Team (In gram) Excess total (in gram) Values 22ct gold 20819.210 20409.030 410.180 Rs.3769955.42 @919/- per gm 20 ct gold 140.00 140.00 - 18ct gold 1569.422 1562.904 6.518 Rs.5449/- @ 836/- per gm Silver Ornaments 64423.287 42000 22423.287 Rs.4,14,830/- @ 18500 per k....
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.... in its books of account as compared to the physical stock found at the time of survey. We find that once the AO had accepted the stock as per books reconciled by the assessee. No deficiency or mistake is found or pointed out in the said reconciliation then AO cannot make any addition on this account. If the books of account show higher figure of stock then what was found in the course of survey, such excess cannot be added as undisclosed investment. Accordingly, this addition has rightly been deleted by CIT(A) and we confirm the same. 19. The next issue in this appeal of revenue is against the order of CIT(A) deleting the addition made by AO on account of customers' gold lying in stock treating the same as unexplained investment. For this, revenue has raised following ground no.5: "Ground No. 5. That Ld. CIT(A) has erred in law as well as facts in deleting addition of Rs. 51,53,238/- which was made stated by customers gold as unexplained investment." 20. Brief facts leading the above issue are that the AO during the course of assessment proceedings noticed from impounded document MS-20 that the claim of assessee regarding customers' gold is not proved because many o....
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.... (61 in case of Smt Maya Sirkar of AE-335, Salt Lake City. Kolkata 700064 for A.Y 2007-08 (F.Y. 2006-07) With reference to your above mentioned letter, I hereby state that the person, Smt Maya Sirkar is not known to me and I have not entered into any transaction with her for A. Y 2007-08 (FY 2006-07). However, on visiting the address provided in your letter (AE-335, Salt Lake City), I found that a shop, M B Sirkar & Sons, exists at the said address. 1 normally do not have much purchases made from this shop. In the FY 2006-07, I would have purchased items in the range of Rs. 18,000 to 20,000 in the entire FY from this shop . Unfortunately, I am not able to locate the purchase bills and therefore am not in a position to furnish the documentary evidence in support of my submission, The lack of documents is deeply regretted. My PAN number is AAHPP2522K. Thanking you, Yours truly, Sd- A K Prasad CF-282, Salt Lake City Kolkata 700064. " Reply of Sh. A.K. Bhadra 23RD December, 2009 "The Deputy Commissioner of Income Tax Circle-50 Bamboo villa 169, A.J.C.Bo....
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....essee. But from the notice u/s 133(6), it appears that the AO did not raise any query in such notices with regard to the deposit of gold, if any, by the customers. From the perusal of the notices U/S 133(6) it is observed that queries were raised as under: "Acting u/s. 133(6) of the Income Tax Act, 1961, you are hereby requested to furnish the following information in writing in respect of the above mentioned assessee. 1. Details of transactions in cash or otherwise with the above mentioned assessee during the financial year 2006-07 (F.Y. 2007-08) with opening balance and closing balance. 2. Details of balance of cash or otherwise lying with the above mentioned assessee on 12.9.2006. 3. Detail of payment received/made during the financial year 2006-07. 4. Please furnish your P.A.No. Please furnish the documentary evidence in support of your submission. I also find that the AO himself has accepted the deposit of gold from the customers, as per the calculations made in para 11 of the assessment order while making the addition of Rs. 7,97,234/-. From the working of the undisclosed income of Rs. 7,97,234/- "Gold ornaments b....
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.... The AO issued notices to few of customers, some of them accepted having the transaction and some of them denied. The AO asked the assessee to explain the customer's gold and ultimately the AO concluded that the assessee admitted for the addition. We find that the assessee filed the list of the customers from whom gold was received for remaking. We have gone through the order sheet notings dated 29.12.2009. The AO has recorded as under: "The AR was also given the details of replies received from different parties against verification letter issued to them. The AR submitted as he has already admitted the discrepancy to the extent of entries no further action is warranted". This shows that the AR admitted the discrepancy and no further action was required by which it meant that he did not want to cross examine the parties who has replied in the negative. But there still remained the parties who have confirmed having the transaction with the assessee during the year. Even if some of the parties did not accept but the fact could have been brought out from the records. We noted from the Audited Accounts filed with the return that the assessee has received making charges ....
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....o the remand report and the relevant papers filed before me. I find that in page -34 of annexure MS-4 bulk quantity of stones is mentioned but there is no mention of any quality of stones. Similar is the position in page-I of MS-19. The DVO has also calculated the market value of 3050.98 ct of stones at Rs. 39,16,154/-. If the gross profit embedded therein is reduced therefrom, the cost price of the stones found comes to about Rs. 1000 per ct and the cost price of the stones purchased vide pag34 of MS-4 also comes to about Rs. 1000 per ct. I also find from the audited accounts that the assessee had purchased more than 500 gms (equal to 2500cts) of stones during the year and had stock of over 165 gms equal to more than 800 cts. The CBDT in its Press Note dated 11.5.94 has instructed that even during the search and seizure proceedings not to treat the jewellery as unexplained if the weight of the jewellery found tallies with the weight disclosed by the assessee. The assessee has been able to demonstrate the she had sufficient stock of the stones as on the date of survey. In view of the above the addition made by the AO is deleted. This ground is, hence, allowed." Aggrieved, revenu....